Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: September 13th, 2021 | 0 Comments

TWENTY YEARS AGO – The US stock market did not open at its regular time of 9:30am ET on Tuesday 9/11/01, shutting down after the first plane hit the North Tower of the World Trade Center at 8:46am ET and the second plane hit the South Tower at 9:03am ET. When the market did reopen on Monday 9/17/21, the S&P 500 fell 4.9% (total return) for the day. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

FROM THEN TO NOW – The S&P 500 was already in a “bear” market slide when the 9/11 attacks occurred, having peaked 1 ½ years earlier on 3/24/00. That “bear” did not end for more than another year (on 10/09/02), subsequently followed by 2 additional “bears” in 2007-09 and in 2020. In spite of 3 “bears” in the last 20 years, the S&P 500 has gained +9.4% per year (total return) from 9/10/01 to last Friday 9/10/21 (source: BTN Research).

MARGIN DEBT – The use of margin debt on the New York Stock Exchange fell in July 2021 to $844 billion, breaking a streak of 8 consecutive months of record-setting debt (source: Financial Industry Regulatory Authority).

LUMP-SUM NEEDED – A present value (PV) amount of $195,929 is required to fund a $1,000 per month payment for 20 years with a +3% annual increase for maintenance of purchasing power if a +5% annual rate of return is maintained into the future. The PV amount is $269,006 if the required payment period is 30 years. The calculations ignore the impact of taxes and are for illustrative purposes only and are not intended to reflect any specific investment alternative (source: BTN Research).

THEY HAD ENOUGH – 3.2 million Americans retired in 2020, a +56% increase over the average 2.05 million Americans who retired over the previous 8 years, i.e., 2012-2019 (source: Pew Research Center).

TAXES – Congress will debate 3 major tax hikes designed to offset the cost of the proposed $3.5 trillion social infrastructure bill: 1) a corporate income tax increase (to raise $1 trillion over 10 years), 2) a corporate tax on overseas income (to raise $550 billion), and 3) a higher capital gains tax (to raise $322 billion) (source: CNBC).

IN TROUBLE – At least 500 US corporations have filed for bankruptcy protection per year since 2015, including 630 in 2020. 242 corporations filed for bankruptcy in the 1st half of 2021 (source: S&P Global Mkt Intelligence).

NATIONWIDE AVERAGE – The value of a single-family home in the United States increased by an average of +17.4% over the 12 months from 6/30/20 to 6/30/21 (source: Federal Housing Finance Agency).

GETTING WORSE – The projected 75-year shortfall in the Social Security Trust fund has tripled in the last 10 years. The 2011 Trustees Report forecasted a $6.5 trillion present value shortfall between payroll taxes anticipated to be collected and projected benefits to be paid out over the next 75 years. The 2021 report, released 8/31/21, now projects the present value shortfall to be $19.8 trillion (source: 2021 Trustees Report).

MOVED MONEY AROUND – The Disability Insurance (DI) Trust Fund was projected to be depleted by the 4Q of 2016 per a 7/22/15 trustee report. This forced Congress to allocate more of the 12.4% combined payroll taxes collected from employers and employees for 3 years (2016-17-18) to the DI fund. The extra funds have pushed the DI Trust Fund’s exhaustion date to 2057 or 36 years out (source: Social Security Trustees 2021 Report).

MEDICARE – Per an 8/31/21 report, the trust fund supporting Medicare Part A (hospital insurance) is projected to be depleted by 2026. The long-term (75-year) present value shortfall in the trust fund could be corrected by an immediate 0.77 percentage point increase in combined Medicare payroll taxes (from its current 2.90% to 3.67%) or an immediate 16% reduction in Medicare expenditures (source: Medicare Trustees 2021 Report).

DOLLARS IN, DOLLARS OUT – At the end of 2020, Medicare was covering 62.6 million Americans (19% of our population). The program was cash negative in 2020, taking in $900 billion of income (including $5 billion of interest income) while paying out $926 billion in benefits (source: Medicare).

NOT SLOWING DOWN – 51 million Americans became infected with the COVID-19 virus in August 2020. 4.35 million Americans became infected with the COVID-19 virus in August 2021 (source: NBC News).

TOP TWO FOR FASHION IMPORTS – For the 12 months ending 7/31/21, China was the supplier of 23.3% of the USA’s “apparel” imports, while Vietnam had an 18.9% market share (source: Commerce Department).

IN TIME FOR FOOTBALL – 23 states offer legalized sports betting today, with another 9 states having passed legislation allowing betting but they have yet to make the gambling operational (source: Amer. Gaming Assoc.).